Home Market Alibaba beats sales forecasts on strong commerce growth

Alibaba beats sales forecasts on strong commerce growth


BEIJING: Alibaba Group Holding Ltd , China's biggest e-commerce firm, reported a 61 percent increase in fourth-quarter revenue, beating analyst estimates, driven by stronger than expected growth in its core commerce business.

The company also forecast a revenue increase of 60 percent for the year to March 31, 2019, versus 58 percent in 2017-18.

The results mark two years of continuous quarterly revenue growth above 50 percent for Alibaba, even as new business investments and the consolidation of its 33 percent stake in payment affiliate Ant Financial continue to weigh on margins.

The company posted 61.9 billion yuan ($9.73 billion) in revenue for January-March, versus an average estimate of 58.9 billion yuan from 23 analysts polled by Thomson Reuters I/B/E/S.

Alibaba's operating margin for the quarter was 15 percent, down from 25 percent a year earlier.

The company has invested heavily in cloud computing, overseas e-commerce and offline retail in a bid to maintain its breakneck growth as China's urban e-commerce market shows signs of saturation.

Alibaba's core commerce business grew 62 percent year-over-year to 51.3 billion yuan, while its cloud computing business grew 103 percent to 4.4 billion yuan, buoyed by new overseas data centers.

The quarter was the first since Alibaba acquired a one-third stake in Ant Financial, replacing an earlier profit share agreement under which Ant paid royalty fees to Alibaba equivalent to 37.5 percent of its pretax profits.

The switch, which helps pave the way for Ant Financial's upcoming IPO, is likely to tamp profits in the short term as the payments company invests to stave off competition in the Chinese market.

Alibaba is also facing intense competition from online retail firm JD.com Inc in the hotly contested offline retail and luxury goods markets.

Alibaba's net income attributable to shareholders was 7.6 billion yuan in January-March, down 29 percent from the same quarter in 2017. The drop was due in part to gains from the sale investments during the same quarter in 2017, the company said.

The March quarter is seasonally slow for Alibaba following its bumper sale event, Singles' Day, in November. Sales for the period were also affected by fewer working days due to the Chinese New Year holidays.

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